Corporate-Bond Fund Inflows Surge Before ECB Begins Purchases

Investors are rushing to buy corporate bonds eligible for the European Central Bank’s asset-buying stimulus program.

Funds that hold investment-grade euro-denominated notes attracted the equivalent of $1.5 billion of cash in the week to Wednesday, the most in four weeks and the 12th consecutive period of inflows, Bank of America Merrill Lynch analysts said in a note, citing EPFR Global data. Funds for speculative grade bonds, which are excluded from the ECB purchases, recorded outflows for the fourth week.

The ECB announced Thursday it would start buying corporate bonds on June 8, marking the latest phase in policy makers’ efforts to boost growth and lending in the region. Investment-grade, non-bank corporate bonds are the latest assets to be added to the ECB’s quantitative easing program, alongside government debt and mortgage-backed notes.

Total investment-grade inflows for the year have now exceeded outflows by $317 million, according to the note.

The average yield investors demand to hold euro bonds sold by investment-grade companies has fallen to near the lowest in a year at 1.04 percent, Bank of America Merrill Lynch Index data show.